Yields decline as Trump hints war may end soon. Treasury yields climbed ~7 bps overnight alongside surging crude oil futures after Iran announced Mojtaba Khameni as their supreme leader. However, yields dropped 3-5 bps in the aftermath of Trump’s comments that suggested the war was progressing ahead of schedule, which also triggered a 13-15% drop in WTI and Brent crude futures. Yields ultimately closed 2-4 bps lower across the curve, with the 2-year yield at 3.54% and the 10-year yield at 4.10%. Meanwhile, stocks rallied on the positive comments from Trump, with the S&P 500 and NASDAQ closing 0.83% and 1.38% higher, respectively.
Oil prices pare gains after G-7, Trump quell concerns. Brent crude, the global oil benchmark, hit nearly $120 per barrel in overnight trading before closing below $90 per barrel. The price reversal came after the Group of Seven Finance Ministers said they would take “all necessary measures, including using strategic reserves, to stabilize the market,” though they won’t do so just yet. The move was also fueled by optimism from President Trump, who said that the war “is very complete, pretty much” after previously warning that the conflict could last four to five weeks. Oil prices remain elevated, having been around $72 before the initial US-Israeli attacks just over a week ago.
Iran announces new Supreme Leader, says it will not let up in war. Iran has named Mojtaba Khamenei, son of the recently assassinated Ayatollah Ali Khamenei, as its new Supreme Leader. Though he was widely seen as the frontrunner, President Trump has criticized the choice, as Khamenei is likely to be less amendable to the US than other candidates. Dina Esfandiary, a Bloomberg Geoeconomics analyst, stated that Mojtaba “shares many of the same ideological leanings as his father and will aim to maintain continuity — including in the war.” Mojtaba has deep ties to the Islamic Revolutionary Guard Corps,and according to Iranian media outlet Fars, the vote was “decisive.”